Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Financial Statements for the
Six Months Ended June 30, 1998
(Unaudited)
[LOGO]
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investment in Standish Short-Term Asset Reserve Portfolio
("Portfolio"), at value (Note 1A) $ 276,360,514
Receivable for Fund shares sold 50,000
Miscellaneous Receivable 10,115
Prepaid expenses 701
-------------
Total assets 276,421,330
Liabilities
Distributions payable $ 279,337
Accrued accounting and transfer agent fees 9,770
Accrued expenses and other liabilities 19,818
-----------
Total liabilities 308,925
-------------
Net Assets $ 276,112,405
=============
Net Assets consist of:
Paid-in capital $ 287,430,654
Accumulated net realized loss (11,386,676)
Distributions in excess of net investment income (159,334)
Net unrealized appreciation 227,761
-------------
Total Net Assets $ 276,112,405
=============
Shares of beneficial interest outstanding 14,171,354
=============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 19.48
=============
</TABLE>
The accompanying notes are an integral part of the financials statements.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statement of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1B)
Interest income allocated from Portfolio $ 8,456,308
Expenses allocated from Portfolio (431,625)
-----------
Net investment income allocated from Portfolio 8,024,683
Expenses
Accounting and transfer agent fees $ 17,688
Registration fees 15,952
Legal fees 10,403
Audit services 6,385
Insurance expense 3,076
Miscellaneous 7,122
--------
Total expenses 60,626
-----------
Net investment income 7,964,057
-----------
Realized and Unrealized Gain (Loss)
Net realized loss allocated from Portfolio on:
Investment security transactions $(68,970)
--------
Net realized loss (68,970)
Change in unrealized appreciation (depreciation) allocated from Portfolio on:
Investment securities 113,864
--------
Change in net unrealized appreciation (depreciation) 113,864
-----------
Net realized and unrealized gain on investments 44,894
-----------
Net Increase in Net Assets from Operations $ 8,008,951
===========
</TABLE>
The accompanying notes are an integral part of the financials statements.
3
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
---------------- ---------------
<S> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 7,964,057 $ 13,722,244
Net realized loss (68,970) (544,274)
Change in net unrealized appreciation (depreciation) 113,864 355,566
------------ -------------
Net increase in Net Assets from Investment Operations 8,008,951 13,533,536
------------ -------------
Distributions to Shareholders
From net investment income (7,964,062) (13,714,508)
------------ -------------
Total distributions to shareholders (7,964,062) (13,714,508)
------------ -------------
Fund Share (principal) Transactions (Note 5)
Net proceeds from sale of shares 116,485,314 227,565,089
Value of shares issued to shareholders in payment of distributions declared 6,019,229 9,749,484
Cost of shares redeemed (92,194,028) (185,450,205)
------------ -------------
Increase in Net Assets from Fund share transactions 30,310,515 51,864,368
------------ -------------
Total Increase in Net Assets 30,355,404 51,683,396
Net Assets
At beginning of year 245,757,001 194,073,605
------------ -------------
At end of year (including distributions in excess of net investment income of
$159,334 and $159,329, respectively) $276,112,405 $ 245,757,001
============ =============
</TABLE>
The accompanying notes are an integral part of the financials statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, 1998 ---------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.48 $ 19.50 $ 19.55 $ 19.22 $ 19.79 $ 19.96
-------- -------- --------- --------- --------- ---------
Investment Operations:
Net investment income 0.09 1.15 1.11 1.13 1.01 1.31
Net realized and unrealized gain (loss)
on investments -- (0.02) (0.04) 0.33 (0.57) (0.17)
-------- -------- --------- --------- --------- ---------
Total from investment operations 0.09 1.13 1.07 1.46 0.44 1.14
-------- -------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.09) (1.15) (1.12) (1.12) (1.01) (1.31)
In excess of net investment income -- -- -- (0.01) -- --
-------- -------- --------- --------- --------- ---------
Total distributions to shareholders (0.09) (1.15) (1.12) (1.13) (1.01) (1.31)
-------- -------- --------- --------- --------- ---------
Net Asset Value, End of Period $ 19.48 $ 19.48 $ 19.50 $ 19.55 $ 19.22 $ 19.79
======== ======== ========= ========= ========= =========
Total Return 2.94% 5.94% 5.62% 7.85% 2.27% 5.08%
Ratios/Supplemental Data:
Expenses (to average daily net assets) 0.36%+ 0.36% 0.35% 0.33% 0.33% 0.33%
Net investment income (to average daily
net assets) 5.86%+ 5.89% 5.75% 5.95% 5.24% 5.82%
Portfolio turnover (1) -- 119% 156% 208% 154% 182%
Net assets, end of period (000 omitted) $276,112 $245,757 $ 194,074 $ 243,500 $ 277,017 $ 275,080
</TABLE>
- ------------------------------------------
+ Computed on an annualized basis.
(1)Portfolio turnover represents the rate of portfolio activity for the period
while the Fund was investing directly in securities. The portfolio turnover
rate for the period since the Fund transferred substantially all of its
investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
The accompanying notes are an integral part of the financials statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(1) Significant Accounting Policies:
Standish, Ayer & Wood Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment
company. Standish Short-Term Asset Reserve Fund (the "Fund") is a separate
non-diversified investment series of the Trust.
The Fund invests all of its investable assets in an interest of the
Standish Short-Term Asset Reserve Portfolio (the "Portfolio"), a subtrust
of Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust"), which
is organized as a New York trust, and has the same investment objective as
the Fund. The value of the Fund's investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio
(approximately 100% at June 30, 1998). The performance of the Fund is
directly affected by the performance of the Portfolio. The financial
statements of the Portfolio are included elsewhere in this report and
should be read in conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of the financial statements. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. Investment security valuations
The Fund records its investment in the Portfolio at value. The method by
which the Portfolio values its securities is discussed in Note 1A of the
Portfolio's Notes to Financial Statements, which are included elsewhere in
this report.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. Currently, the
Fund's net investment income consists of the Fund's pro rata share of the
net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted
accounting principles. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
C. Federal taxes
As a qualified regulated investment company under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal year.
D. Other
All net investment income and realized and unrealized gains and losses of
the Portfolio are allocated pro rata among all of the investors in the
Portfolio.
(2) Distributions to Shareholders:
Dividends from net investment income will be declared and distributed
quarterly. The Fund's dividends from short-term and long-term capital
gains, if any, after reduction by capital losses will be declared and
distributed at least annually. In determining the amounts of its
dividends, the Fund will take into account its share of the income, gains
or losses, expenses, and any other tax items of the Portfolio. Dividends
from net investment income and capital gains distributions, if any, are
reinvested in additional shares of the Fund unless a shareholder elects to
receive them in cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatment of asset backed securities Permanent
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
book and tax basis differences relating to shareholder distributions will
result in reclassifications between paid-in capital, undistributed net
investment income and accumulated net realized gain (loss).
(3) Investment Advisory Fee:
The Fund does not directly pay any investment advisory fees, but
indirectly bears its pro rata share of the compensation paid by the
Portfolio to Standish, Ayer & Wood, Inc. ("SA&W") for such services. See
Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. For the six months ended June 30, 1998, SA&W
voluntarily agreed to limit total annual operating expenses of the Fund
and Portfolio (excluding brokerage commissions, taxes and extraordinary
expenses) to 0.36% of the Fund's average daily net assets. The Trust pays
no compensation directly to its trustees who are affiliated with SA&W or
to its officers, all of whom receive remuneration for their services to
the Trust from the SA&W. Certain of the trustees and officers of the Trust
are limited partners or officers of SA&W.
(4) Investment Transactions:
Increases and decreases in the Fund's investment in the Portfolio for the
six months ended June 30, 1998, aggregated $116,443,594 and $96,439,483,
respectively.
(5) Shares of Beneficial Interest:
The Declaration of Trust permits the trustees to issue an unlimited number
of full and fractional shares of beneficial interest having a par value of
one cent per share. Transactions in Fund shares were as follows:
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
----------------- -----------------
Shares sold.......................... 5,977,339 11,681,922
Shares issued to shareholders in
payment of distributions declared.. 308,866 500,402
Shares redeemed...................... (4,731,334) (9,519,545)
---------- ----------
Net increase......................... 1,554,871 2,662,779
========== ==========
At June 30, 1998, two shareholders were record owners of approximately 29%
and 12% respectively of the total outstanding shares of the Fund.
7
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected Par Value
Security Rate Maturity Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BONDS AND NOTES -- 92.8%
Asset Backed -- 33.8%
ACC Automobile Receivables Trust 6.700% 11/02/99 12/17/2003 $ 4,639,048 $ 4,683,264
ACLC 1997-1 B1A Non-ERISA FRN(a) 6.448% 09/30/98 03/25/2027 5,000,000 4,958,594
Advanta Home Equity Trust Loan 1993-4 A1 5.500% 12/08/00 03/25/2010 454,462 444,325
Aircraft Lease Portfolio Trust 1994-1 A2 7.150% 08/14/98 09/15/2004 4,011,910 4,011,910
Auto Finance Group 1997-A 6.350% 07/23/99 10/15/2002 3,127,465 3,137,238
BCI Home Equity 1994-1 B(a) 6.288% 09/30/98 03/29/2044 1,625,776 1,562,232
Case Equipment Loan Trust 1997-B C 6.410% 02/26/01 09/15/2004 5,087,792 5,107,666
Charming Shoppes Master Trust 1994-1 A 7.000% 04/12/99 04/15/2003 3,500,000 3,522,960
Charter Financial Corp 1994-1A 7.400% 11/20/98 10/25/2001 503,633 506,466
Contimortgage Home Equtiy 1994-4A 7.960% 09/19/98 09/15/2009 596,028 596,144
Delta Funding Home Equity Loan 1998-1 2A(a) 5.858% 09/30/98 05/25/2030 4,339,635 4,340,991
Discover Card Trust 1993-AB 6.800% 09/15/98 08/16/2000 4,183,000 4,179,068
Equacredit Home Equity 1993-4 5.725% 11/19/00 12/15/2008 1,230,811 1,218,503
Ford Motor Credit Corp.(a) 5.660% 09/30/98 11/09/1998 2,800,000 2,803,612
Greentree Financial Corp. 1993-1A 2(a) 6.100% 12/15/98 04/15/2018 281,339 280,811
Greentree Home Equity 1997-3 A2 6.490% 02/05/99 07/15/2028 2,964,411 2,972,741
Greentree Home Equity 1997-D A2 6.160% 09/12/98 09/15/2028 3,521,183 3,521,183
GSAC 1996-B A 6.600% 02/12/99 05/25/2003 2,563,846 2,575,464
HFC Home Equity Loan Trust 1992-2A 1(a) 5.920% 09/30/98 10/20/2007 283,827 283,827
Home Equity Loan Trust 1992-2A MBIA 6.650% 04/22/00 11/20/2012 412,410 411,443
Merrill Lynch Home Equity 1993-1B(a) 6.688% 09/30/98 02/15/2003 320,217 320,317
National Auto Finance 1997-1 ERISA 6.350% 09/01/99 11/21/2003 4,966,518 4,977,383
Old Stone Credit Corp. Home Equity Trust
1992-4 A 6.550% 12/04/00 11/25/2007 341,378 343,085
OPTCS 1996-1 A2(a) 6.048% 09/30/98 04/25/2026 1,268,012 1,269,993
Premier Auto Trust 1994-4 CTF 6.850% 09/01/98 05/02/1999 4,536,791 4,543,868
Premier Auto Trust 1997-2A 2 6.010% 09/30/98 11/06/1999 5,139,952 5,139,952
RFMSI 1997-HS5 A2 6.560% 09/04/98 04/25/2027 1,762,843 1,756,507
SPNB 1991-2 C1 B 8.150% 07/30/98 06/15/2020 384,465 385,006
Standard Credit Card 1994-3 B 7.000% 04/12/99 04/07/2001 2,000,000 2,015,620
Standard Credit Card 1998-1 A6(a) 6.488% 09/30/98 03/23/2003 4,674,000 4,672,539
TMS Home Equity Trust 1996-D A1O(a) 5.866% 09/30/98 04/15/2028 3,249,046 3,250,280
TMS Home Equity Trust 1998-1 AV1(a) 5.831% 09/30/98 04/20/2028 4,831,228 4,832,738
World Omni Auto Lease 1996-A A1 ERISA 6.300% 01/25/99 06/25/2002 5,065,621 5,009,369
World Omni Auto Lease 1996-B B
Non-ERISA 144A 6.850% 07/15/00 11/15/2002 3,728,891 3,795,895
-------------
Total Asset Backed (Cost $93,335,224) 93,430,994
-------------
Collateralized Mortgage Obligations -- 4.8%
GE Capital Mtg 1997-9 1A2 PAC 6.750% 01/01/00 10/25/2027 4,790,000 4,821,434
Norwest Asset Sec Corp. 1997-14 6.750% 02/01/00 09/25/2027 3,993,040 4,010,510
Residential Funding 1997-S12 A10 6.700% 10/15/00 08/25/2027 4,405,000 4,431,155
-------------
Total Collateralized Mortgage
Obligations (Cost $13,272,378) 13,263,099
-------------
</TABLE>
The accompanying notes are an integral part of the financials statements.
8
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected Par Value
Security Rate Maturity Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporate -- 37.8%
Bank Bonds -- 13.3%
BankBoston(a) 5.738% 08/28/98 08/28/1998 $ 3,000,000 $ 3,000,960
Banponce Corp. 6.270% 03/04/1999 6,400,000 6,433,984
First Bank FRN(a) 5.722% 09/30/98 12/20/2000 4,000,000 3,993,880
Huntington Bank 6.150% 01/07/1999 1,550,000 1,552,046
Key Corp. 8.400% 04/01/1999 5,300,000 5,393,704
MBNA Corp.(a) 6.042% 09/30/98 05/05/1999 3,000,000 3,000,210
MTN-MBNA American Bank 7.120% 04/12/1999 2,450,000 2,466,636
Nations Bank 5.750% 03/15/2001 2,500,000 2,485,825
Provident Bank 6.125% 12/15/2000 4,000,000 4,003,080
Sovereign Bancorp 6.750% 07/01/2000 4,555,000 4,596,314
-------------
36,926,639
-------------
Financial -- 17.2%
American Express Centuri Bank(a) 5.756% 09/30/98 07/12/1999 2,500,000 2,510,050
Bear Stearns Co. 7.625% 09/15/1999 1,000,000 1,018,260
Bear Stearns Co.(a) 5.600% 09/30/98 01/14/1999 2,800,000 2,786,000
Beneficial Corp. 8.170% 11/09/1999 3,950,000 4,065,538
CIT Group Holdings 6.250% 09/30/1999 5,000,000 5,021,600
Conseco(a) 6.400% 06/15/01 06/15/2001 4,500,000 4,500,810
Dean Witter Discover(a) 5.360% 09/30/98 03/10/1999 2,800,000 2,753,940
Finova Financial Corp. 6.750% 03/25/1999 5,000,000 5,025,350
Goldman Sachs, Inc. 144A(a) 6.088% 09/30/98 01/26/1999 3,000,000 3,007,500
Household Financial Corp.+ 6.000% 05/08/2000 2,000,000 2,004,280
Lehman Brothers 6.330% 08/01/2000 3,000,000 3,016,620
Lehman Brothers 6.000% 02/26/2001 4,000,000 3,993,840
Taubman Realty Group REIT 8.000% 06/15/1999 1,000,000 1,016,380
Wellsford Residential Property REIT+(a) 5.945% 09/30/98 11/24/1999 6,750,000 6,753,308
-------------
47,473,476
-------------
Industrial Bonds -- 7.3%
Chrysler Finance Corp. Senior Notes 9.500% 12/15/1999 3,000,000 3,144,360
Coca-Cola Co. 144A 6.000% 03/15/2001 3,250,000 3,248,895
COMDISCO Inc. 6.500% 06/15/2000 5,750,000 5,799,565
Cox Enterprises 144A 6.250% 08/26/1999 4,960,000 4,972,450
Sears Corp. 6.690% 04/30/2001 3,000,000 3,053,460
-------------
20,218,730
-------------
Total Corporate (Cost $104,466,863) 104,618,845
-------------
Government/Other -- 3.2%
EuroDollar -- 1.0%
St. Georges Euro(a) 6.563% 09/30/98 07/14/2000 2,857,200 2,872,886
-------------
</TABLE>
The accompanying notes are an integral part of the financials statements.
9
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected Par Value
Security Rate Maturity Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yankee Bonds -- 2.2%
St. Georges Bank 144A Notes Private
Placement 6.875% 04/01/1999 $ 1,800,000 $ 1,811,988
Tyco International 6.125% 06/15/2001 4,200,000 4,203,570
-------------
Total Government/Other (Cost $8,868,614) 8,888,444
-------------
Non-Agency -- 1.7%
Pass Thru Securities -- 1.7%
Resolution Trust Corp. 1992-7 A3(a) 7.366% 09/25/98 03/25/2022 537,661 535,309
Resolution Trust Corp. 1992-12 A-A2(a) 7.500% 07/15/98 08/25/2023 221,679 220,753
Resolution Trust Corp. 1994 D Non-ERISA(a) 8.000% 07/01/99 06/25/2026 3,883,430 3,941,681
-------------
Total Non-Agency (Cost $4,730,690) 4,697,743
-------------
U.S. Government Agency -- 5.4%
Pass Thru Securities -- 5.4%
FFCB 5.990% 07/31/98 12/23/1999 2,870,000 2,877,462
FHARM(a) 7.855% 02/01/23 02/01/2023 191,818 193,886
FHLB+ 5.710% 10/01/1998 5,000,000 5,079,000
FHLMC Gold 5 Yr 7.000% 02/23/99 08/01/1999 1,444,094 1,459,438
FHLMC Gold 5 Yr 8.000% 06/23/99 02/01/2000 -
07/01/2000 1,714,621 1,742,482
FHLMC Gold 5Yr 5.500% 08/23/98 10/01/1998 581,850 579,336
FNMA Medium Term Notes+ 4.920% 09/28/98 09/28/1998 3,000,000 2,996,250
-------------
Total U.S. Government Agency
(Cost $14,872,429) 14,927,854
-------------
U.S. Treasury Obligations -- 6.1%
Treasury Notes -- 6.1%
U.S. Treasury Note+ 5.750% 12/31/1998 2,575,000 2,580,227
U.S. Treasury Note+ 6.000% 06/30/1999 10,500,000 10,550,820
U.S. Treasury Note+ 5.625% 11/30/2000 1,500,000 1,503,285
U.S. Treasury Note+ 5.875% 11/15/1999 2,075,000 2,084,400
-------------
Total U.S. Treasury Obligations
(Cost $16,704,628) 16,718,732
-------------
TOTAL BONDS AND NOTES (COST $256,250,826) 256,545,711
-------------
SHORT-TERM INVESTMENTS -- 6.5%
Commercial Paper -- 5.7%
Ciesco 5.500% 07/06/98 3,300,000 3,280,530
Norfolk & Southern 5.750% 07/20/98 4,000,000 3,963,600
Sigma 5.520% 07/27/98 3,300,000 3,269,970
Stanley Works 5.480% 08/06/98 2,000,000 1,980,000
Raytheon 6.500% 07/01/98 3,200,000 3,198,038
-------------
15,692,138
-------------
</TABLE>
The accompanying notes are an integral part of the financials statements.
10
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Agency -- 0.8%
FHLMC 5.470% 07/14/98 $ 2,200,000 $ 2,191,658
------------
TOTAL SHORT-TERM INVESTMENTS (COST $17,950,920) 17,883,796
------------
TOTAL INVESTMENTS-- 99.3% (COST $274,201,746) $274,429,507
Other Assets, Less Liabilities-- 0.7% 1,931,007
------------
NET ASSETS-- 100% $276,360,514
============
</TABLE>
Notes to the Schedule of Investments:
144A - Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration.
FFCB - Federal Farm Credit Bank
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
REIT - Real Estate Investment Trust
SPNB - Security Pacific National Bank
(a) Variable Rate Security; rate indicated is as of 6/30/98.
+ Denotes all or part of security pledged as a margin deposit (Note 5).
The accompanying notes are an integral part of the financials statements.
11
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value (Note 1A) (identified cost, $274,201,746) $ 274,429,507
Interest and dividends receivable 1,967,413
Miscellaneous receivable 78,507
Receivable for investments sold 14,709
Deferred organization costs (Note 1E) 9,611
Prepaid expenses 5,621
-------------
Total assets 276,505,368
-------------
Liabilities
Accrued accounting and custody fees $ 26,655
Due to custodian 89,823
Accrued trustees' fees and expenses (Note 2) 4,169
Accrued expenses and other liabilities 24,207
-----------
Total liabilities 144,854
-------------
Net Assets (applicable to investors' beneficial interests) $ 276,360,514
=============
</TABLE>
The accompanying notes are an integral part of the financials statements.
12
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statement of Operations
For the period January 2, 1998
(commencement of operations) to
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1C)
Interest income $ 8,456,308
-----------
Total income 8,456,308
Expenses
Investment advisory fee (Note 2) $340,564
Accounting and custody fees 63,077
Audit services 12,893
Trustees' fees and expenses (Note 2) 8,083
Insurance expense 2,040
Legal fees 1,488
Amortization of organization expense (Note 1E) 504
Miscellaneous 2,976
--------
Total expenses 431,625
-----------
Net investment income 8,024,683
-----------
Realized and Unrealized Gain (Loss)
Net realized loss
Investment securities transactions (68,970)
--------
Net realized loss (68,970)
Change in unrealized appreciation (depreciation)
Investment securities 227,761
--------
Change in net unrealized appreciation 227,761
-----------
Net realized and unrealized gain 158,791
-----------
Net Increase in Net Assets from Operations $ 8,183,474
===========
</TABLE>
The accompanying notes are an integral part of the financials statements.
13
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
January 2, 1998
(commencement of operations)
to June 30, 1998
(Unaudited)
-------------------------------
<S> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 8,024,683
Net realized loss (68,970)
Change in net unrealized appreciation (depreciation) 227,761
------------
Net increase in Net Assets from Investment
Operations 8,183,474
------------
Capital Transactions
Assets contributed by Standish Short Term Asset
Reserve Fund at commencement (including
unrealized appreciation of $113,897) 248,172,929
Contributions 116,443,594
Withdrawals (96,439,483)
------------
Increase in Net Assets resulting from
capital transactions 268,177,040
------------
Total Increase in Net Assets 276,360,514
Net Assets
At beginning of period --
------------
At end of period $276,360,514
============
</TABLE>
The accompanying notes are an integral part of the financials statements.
14
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
January 2, 1998
(commencement of operations)
to June 30, 1998
(Unaudited)
-------------------------------
<S> <C>
Ratios:
Expenses (to average daily net assets) 0.32%+
Net investment income (to average daily net assets) 5.92%+
Portfolio Turnover 49%
Net assets, end of period (000s omitted) $276,361
</TABLE>
- --------------------------------------------------------
+ Computed on an annualized basis.
The accompanying notes are an integral part of the financials statements.
15
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(1) Significant Accounting Policies:
Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") was
organized as a master trust fund under the laws of the State of New York
on January 18, 1996 and is registered under the Investment Company Act of
1940, as amended as an open-end, management investment company. Standish
Short-Term Asset Reserve Portfolio (the "Portfolio") is a separate
diversified investment series of the Portfolio Trust.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. Investment security valuations
Securities for which quotations are readily available are valued at the
last sale price, or if no sale price, at the closing bid price in the
principal market in which such securities are normally traded. Securities
(including restricted securities) for which quotations are not readily
available are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees.
Short-term instruments with less than sixty-one days remaining to maturity
when acquired by the Fund are valued at amortized cost. If the Portfolio
acquires a short-term instrument with more than sixty days remaining to
its maturity, it is valued at current market value until the sixtieth day
prior to maturity and will then be valued at amortized cost based upon the
value on such date unless the Trustees determine during such sixty-day
period that amortized cost does not represent fair value.
B. Repurchase agreements
It is the policy of the Portfolio to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the
Portfolio to monitor on a daily basis, the market value of the repurchase
agreement's underlying investments to ensure the existence of a proper
level of collateral.
C. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or accretion of discount on long-term debt securities when
required for federal income tax purposes. Realized gains and losses from
securities sold are recorded on the identified cost basis.
D. Taxes
The Portfolio is treated as a partnership for federal tax purposes. No
provision is made by the Portfolio for federal or state taxes on any
taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all
or substantially all of their assets in the Portfolio, the Portfolio
normally must satisfy the source of income and diversification
requirements applicable to regulated investment companies (under the
Internal Revenue Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net investment income,
net realized capital gains, and any other items of income, gain, loss
deduction or credit.
16
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
E. Deferred Organizational Expenses
Costs incurred by the Portfolio in connection with its organization and
initial registration are being amortized on a straight-line basis through
January 2003.
(2) Investment Advisory Fee:
The investment advisory fee paid to Standish, Ayer & Wood, Inc. ("SA&W")
for overall investment advisory services is paid monthly at the annual
rate of 0.25% of the Portfolio's average daily net assets. The Portfolio
Trust pays no compensation directly to its trustees who are affiliated
with SA&W or to its officers, all of whom receive remuneration for their
services to the Portfolio Trust from SA&W. Certain of the trustees and
officers of the Portfolio Trust are directors or officers of SA&W.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
U.S. Government Securities................................. $ 61,292,154 $ 31,936,802
============ ============
Investments (non-U.S. Government Securities)............... $115,418,263 $26,320,595
============ ============
</TABLE>
(4) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at June 30, 1998, as computed on a federal
income tax basis, were as follows:
Aggregate Cost........................................ $274,201,746
============
Gross unrealized appreciation......................... 657,811
Gross unrealized depreciation......................... (430,050)
------------
Net unrealized appreciation........................... $ 227,761
============
(5) Financial Instruments:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to enhance
potential gain in circumstances where hedging is not involved. The nature,
risks and objectives of these instruments are set forth more fully in
Parts A & B of the Master Portfolio registration statement.
The Portfolio trades the following financial instruments with off-balance
sheet risk:
Options
Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on or before a
certain date. The Portfolio may use options to hedge against risks of
market exposure and changes in security prices, as well as to seek to
enhance returns. Writing puts and buying calls tend to increase the
Portfolio's exposure to the underlying instrument. Buying puts and writing
calls tend to decrease the Portfolio's exposure to the underlying
instrument, or hedge other Portfolio investments. Options, both held and
written by the Portfolio, are reflected in the
17
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
accompanying Statement of Assets and Liabilities at market value. The
underlying face amount at value of any open purchased option is shown in
the Schedule of Investments. This amount reflects each contract's exposure
to the underlying instrument at period end. Losses may arise from changes
in the value of the underlying instruments, if there is an illiquid
secondary market, or if the counterparties do not perform under the
contracts' terms.
Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised
or are closed are added to or offset against the proceeds or amount paid
on the transaction to determine the realized gain or loss. Realized gains
and losses on purchased options are included in realized gains and losses
on investment securities, except purchased options on foreign currency
which are included in realized gains and losses on foreign currency
transactions. If a put option purchased by the Portfolio is exercised, the
premium reduces the cost basis of the securities purchased by the
Portfolio. The Portfolio, as a writer of an option, has no control over
whether the underlying securities may be sold (call) or purchased (put)
and as a result bears the market risk of an unfavorable change in the
price of the security underlying the written option. There were no
outstanding written option contracts at June 30, 1998.
18
<PAGE>
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Standish, Ayer & Wood Investment Trust
One Financial Center
Boston, MA 02111-2662
(800) 221-4795
1005-98
